Turkey's wind of change reached its consumer protection law.
Turkish Parliament enacted a new bill on 7 November 2013 in order
to modernize consumer protection, and at the same time, to
integrate Turkish consumer protection principles with those of the
EU. The new Law No. 6502 on Consumer Protection ("New
Law") published in the Official Gazette on November 28, 2013,
and will enter into force as of May 28th, 2014. Once the New Law
becomes effective, the currently applicable Law No. 4077 on
Consumer Protection will be abolished. This Client Letter points
out a number of fundamental changes brought by the New Law into
Turkish law with regards to consumer loans.
Consumer loans (tüketici kredisi)
First and foremost, with the New Law credit card transactions
that provide payment delay or installments for more than three
months shall be considered as consumer loans. Thus, regulations on
consumer loans explained below shall also be applicable to such
credit card transactions.
The New Law imposes a disclosure obligation on loan providers
with respect to loan agreements they offer. Loan providers are
obliged to deliver to consumers an information sheet, which covers
conditions of the loan agreement they offer, a reasonable period of
time before formation of the agreement.
Under the New Law, the interest rate is required to be fixed in
definite term consumer loan agreements. Such interest rate that is
determined at the time of contract formation cannot be changed to
the detriment of consumers. In case any of contractual interest,
effective interest rate or total cost of the loan is not stipulated
in the agreement, the loan will be used without any interest until
the end of the agreement term.
The New Law provides consumers with a withdrawal right from
consumer loan agreements. Accordingly, consumers shall be entitled
to withdraw from consumer loan agreements within 14 days without
being obliged to show a reason or pay a penalty. In cases where a
consumer uses the loan, she will be obliged to repay the principal
along with the interest accrued from the date on which the
respective loan is used until the date on which the principal is
paid back to the loan provider, within 30 days after sending the
notice of withdrawal to the loan provider. If the consumer fails to
repay the respective amount within the given term, it is considered
that the agreement has not been withdrawnthat is, the
agreement remains valid and enforceable. Further, where an
ancillary loan agreementwhereby loan is granted
explicitly to finance an agreement for provision of specific goods
or servicesis executed, such agreement is terminated
automatically if the consumer withdraws from the agreement on
provision of goods or services and submits the relevant notice to
the loan provider within the withdrawal period. In such cases, the
consumer will not be required to pay an indemnity or penalty.
Under new regime, property loan providers are still entitled to
ask for the remaining amount as a whole if a consumer fails to pay
installments in case of a property loan. Loan provider may still
exercise the foregoing right only if she fulfills all of her
obligations and the consumer defaults on payments of at least two
successive installments. Similar to the currently applicable rules,
to exercise her right to request the remaining amount, a property
loan provider is required to notify the consumer of default and
provide her with a grace period. The New Law extends the grace
period to 30 days (from one week). Also, in calculating the
installments due, interests, commissions and similar fees will not
be taken into account. Further, with the New Law, insurance in
connection with loans will only be offered upon consumer's
Finally, the New Law also provides that in case a bank account
is opened in relation to a definite term loan agreement and merely
loan-related transactions are executed on that account, no fee or
expenses under any name whatsoever can be requested from consumers
in connection with that account. Such an account shall be
automatically closed upon payment of the loan in full unless the
consumer made a written request otherwise. Besides, institutions
issuing credit cards are required to offer consumers at least one
type of credit card for which they do not charge any annual
membership fee or any other fee under similar name.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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